Dean Foods Q2 2019 Earnings: Reports & Follow-up Perspectives

7_Dean_Foods_Milksheds_Header_Aug_19_Earnings
The Dean Foods Earnings Call, the public report of the company’s Q2 financial results, took place Tuesday, August 6th, 2019.
Dean Food stakeholders and the financial community had their first widespread engagement with new CEO Eric Beringause, who assumed the roles of CEO and and President on July 29, 2019, only a week before the Earnings Call.
Mr. Beringause warmly greeted those on the call, briefly introduced himself and his background, and noted he was still getting to know the company and help determine his thoughts on specific actions going forward. Fair enough, since he had only been on the job a week.
This Call and webcast, relatively brief (38 minutes compared to the normal hour), yielded no real surprises concerning the challenges of Dean Foods.  The company is still recovering from not only its own distresses, but is a player in a big food sector, which is also facing challenges.
As such, the stock price, which had gained back into the $1.67-$1.70 range in the couple days before the call (following the announcement of the CEO change), has been rolling up and down again this earnings week. This has been normal for several Earnings Call price cycles in recent years.
At this point, it does seem that there is some renewed optimism for the future since Mr. Beringause has taken the reins as leader of the company.  With processing plants from coast-to-coast, the company’s success is critical to many farming and agricultural communities across the United States, the Southeast included.
One observation is that the spectre of the loss of the Walmart business in 2018 is still coloring the thoughts of the financial community.  However, at the current time, talk of a Walmart expansion by building other milk plants appears to be on a backburner.  There is still just the one plant in Fort Wayne which is operated by Walmart, and many sources indicate that milk plant is still experiencing volume and delivery issues, and still trying to get some consistency with operational standards.
Below is a summary of the financial reports and perspectives following the call. As you read the reports below, and if you do Google searches for Dean Foods news, I would caution everyone to make sure you check dates of any report.  These stories are often old news, but they keep popping up in searches.
This Week’s Dean Foods Earnings-Related News:
 

PRESS RELEASE / Earnings Report: Dean Foods Announces Second Quarter 2019 Results

SEC FILING: In keeping with SEC regulations for publicly traded companies
 
TRANSCRIPT:  Dean Foods Earnings Call for Q2, 2019 (in its entirety)
  • READ:  The call lasted 38 minutes and some change, a bit less than the hour which has been the usual length.  At the link above, you can read the transcript (not a hard read) and see the participants listed by name, including financial analysts who are the normal folks who participate in the Q&A following the company statements.
  • AUDIO?  Do you prefer to listen to the call? There is a link within the Transcript page (above)
SLIDES: The graphics from the Earnings Call webcast can be accessed here; graphics illustrate the discussion found in the company presentation portion of the transcript.
COMMENTARIES: (be aware, headlines may not reflect the actual content of the article)
7 Aug, 2019:  “We’d Rather Watch Dean Foods Stock from a Distance,” says Deutsche Bank    –  Content from Tip Ranks, posted on Yahoo Finance
8 Aug, 2019: “CEO with Milk in His Veins Wants to Restore Embattled Dean Foods,”  – by Lydia Mulvaney for Bloomberg, with assistance from Katherine Doherty
  • Beringause’s appointment has “sparked speculation that Dean is moving away from a sale”
  • Beringause: “Clearly, there’s opportunities to grow the business”, without specification
8 Aug 2019:  “Spoiled Milk: Dean Foods”  from Freyr Capital, posted at Seeking Alpha
  • This article does fairly note that part of the problem is with the entire dairy industry: “Dairy industry is helpless with some even attempting to salvage the situation by fighting the “milk” branding of non-dairy alternatives and labeling them ‘fake milk.’ “
  • Some of the comments following this article are a mixed bag, some positive for milk itself, some saying Dean is heading for better days, some critical
9 Aug 2019: “Dean Foods is Pricing Low, But Could this be a Buy-In Op?”  by Maria Ohle for MicroSmallCap.
  • Quotes CFO Jody Macedonia from the Earnings Call Transcript:   “As retailers continue to invest in private-label milk to drive foot traffic, private-label margin over milk is contracted to $1.26 in June matching a historic low[…]As retailers continue to fund pricing promotions to drive traffic into their stores, they’re draining their own profitability. As a result, we believe these margins are unsustainable and expect it to alleviate over time.”
  • Also stated by the author: “With vast industry experience, Beringause may be a knight in shining armor who will know how to turn this company around.”
It has been the recent pattern with Dean Foods that the stock prices have rolled around a bit in the days preceding and following the Earnings Calls. This graphic illustrates the days following Mr. Beringause’s appointment, and then following the Earnings Call when the financials were released to the public.  A  big positive is that, thus far, at the timing of this post, the stock price has not dipped below $1 a share, which was happening frequently earlier this summer (2019).
6_Dean_Stock_Prices_S
In closing, to Dairy Communities and Dean Employees – how we can help:
  • We all need for this company to become more healthy, and increasing sales of existing products is one way for that to happen.  
  • So could we all join in by encouraging our neighbors and friends to buy Dean Foods products? Even by asking them at church or a community meeting is one way to help get the ball rolling. 
  • Let’s do what we can ourselves to help improve the Dean Foods financial picture, and help our futures in the process!
  • Some are already doing this with specific social media posts and consumer interaction, why not get on board and follow their lead?

 

7_Dean_Foods_Milksheds_Header_Aug_19_Earnings

Eric Beringause named CEO of Dean Foods; brings a Record of Transformation

29_July_Dean_Foods_Beringause_CEO

Eric Beringause is the new CEO and President of  Dean Foods, the nation’s largest processor and distributor of fresh fluid milk and dairy case products.  He replaces Ralph Scozzafava, who has stepped down.  Beringause’s tenure began on July 29, 2019.

Mr. Beringause brings over 30 years of experience in the dairy, consumer products, and food processing industries to his new position.  Most recently, he was the CEO of Gehl Foods, the nation’s largest processor of nacho cheese.  Through his career, he has worked for a variety of companies such as Nestle, ConAgra, Alcoa, and Pillsbury.  His work portfolio includes private-label and branded products.

As the nation’s largest processor of fluid milk, the performance of Dean Foods in turns affects the fortunes of tens of thousands of dairy farms and regional farm economies across the United States.

It is no secret that the dairy industry itself, as well as Dean Foods, has seen its fair share of difficulties in the past two years;  Mr. Beringause faces daunting challenges in turning the company around.  Jim Turner, non-executive chairman of the Dean Foods Board, expresses confidence Beringause is the person for the job in a news release: “He has a long track record of creating value in dairy and consumer products companies, as well as a unique combination of turnaround and operational expertise.”

Upon the news of the CEO change late on Friday afternoon, July 26, Dean Foods stock rose in off-market trading over the weekend, rolled a bit during the day on Monday, July 29, and at the close of business, closed up 2 cents/share from Friday afternoon’s closing value of $1.25.  On Tuesday, July 30th, the stock had climbed again to $1.36 at closing.

Following is the original news release, along with some additional public information about Mr. Beringause:

The original news release from PR Newswire:

DALLAS, July 26, 2019 /PRNewswire/ — Dean Foods Company (DF) today announced that Eric Beringause has been appointed President and Chief Executive Officer and a member of the Dean Foods Board of Directors, effective July 29, 2019. Beringause succeeds Ralph Scozzafava, who has stepped down as CEO and resigned from his position on the Board.

Beringause brings to Dean Foods more than 30 years of transformational leadership and operational experience at a broad range of blue-chip brands in the food, beverage and consumer products industries, including expertise in food processing and branded and contract manufacturing. Most recently, he served as CEO of Gehl Foods, LLC, a market-leading producer of dairy-based beverages and food products. Prior to that, he served as CEO of Advanced Refreshment LLC, one of the largest U.S. producers of private-label bottled water and water-based beverages, and as CEO of Sturm Foods, Inc., a leader in private-label food products, specialty food brands and contract manufacturing. Earlier in his career, Beringause held various business development, finance, and sales and marketing roles at Alcoa Consumer Products, Gerber Infant & Baby Products, ConAgra, Inc./Grist Mill, Nestle, Inc., Nabisco Brands and The Pillsbury Company.

“We believe Eric is the right leader to drive the transformation of the business as the Company continues to execute on its enterprise-wide cost productivity plan and its previously announced exploration of strategic alternatives,” said Jim Turner, Non-Executive Chairman of the Dean Foods Board. “He has a long track record of creating value in dairy and consumer products companies, as well as a unique combination of turnaround and operational expertise.”

“I am honored to join Dean Foods at this important juncture,” said Beringause. “Dean Foods is the nation’s largest dairy processor and a leader in the industry, and I am excited to work with the Board and management team to leverage our scale and substantial assets to realize the significant opportunities available to transform our company. My top priority will be to ensure we have the right footprint and strategies in place to drive sustainable growth and profitability for the benefit of our shareholders, employees, customers and other stakeholders.”

Turner continued, “On behalf of the entire Board, I want to thank Ralph for his service and contributions to Dean Foods over the past five years. We appreciate his dedication to the Company and we wish him all the best in the future.”

Upcoming Webcast of Second Quarter 2019 Earnings Conference Call
The Company will host a live webcast of its second quarter 2019 earnings conference call on Tuesday, August 6 at 9:00 a.m. Eastern Time. The webcast is expected to last approximately one hour and will be accessible by visiting http://www.deanfoods.com/our-company/investor-relations/ and by clicking “Webcasts.”

The webcast will be accessible on most operating systems and browsers. A webcast replay will be available for approximately 45 days following the event within the Investor Relations section of the Company’s website.

About Dean Foods:
Dean Foods is a leading food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States. Headquartered in Dallas, Texas, the Dean Foods portfolio includes DairyPure®, the country’s first and largest fresh, national white milk brand, and TruMoo®, the leading national flavored milk brand, along with well-known regional dairy brands such as Alta Dena®, Berkeley Farms®, Country Fresh®, Dean’s®, Friendly’s®, Garelick Farms®, LAND O LAKES®* milk and cultured products, Lehigh Valley Dairy Farms®, Mayfield®, McArthur®, Meadow Gold®, Oak Farms®, PET®**, T.G. Lee®, Tuscan® and more. Dean Foods also has a joint venture with Organic Valley®, distributing fresh organic products to local retailers. In all, Dean Foods has more than 50 national, regional and local dairy brands as well as private labels. Dean Foods also makes and distributes ice cream, cultured products, juices, teas, and bottled water. Approximately 15,000 employees across the country work every day to make Dean Foods the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion. For more information about Dean Foods and its brands, visit www.deanfoods.com.

*The LAND O LAKES brand is owned by Land O’Lakes, Inc. and is used by license.
**PET is a trademark of Eagle Family Foods Group LLC, under license.

CONTACT: Investor Relations/External Communications, Suzanne Rosenberg, +1 214-303-3438. Media please contact +1 214-721-7766 or media@deanfoods.com

 

Additional Background Information about Mr. Beringause:

Vassar:  Mr. Beringause serves on the Board of Trustees of Vassar College, from whom he received his undergraduate degree.  A biography can be read on Vassar’s website, or is posted here:

29_July_Dean_Foods_Beringause_Vassar_Board

 

Giving Back: Related to experiences and friendships which began with a summer job while at Vassar,  Mr. Beringause has been a huge supporter of an effort which builds up the Navajo nation, assists the Student Conservation Association, and involves telecommunications – all at the same time.   And he believes that teaching the ‘why’ is important.  Learn more in “That Vassar Serendipity – Three Alums Find a Common Cause,” a part of the Vassar “Stories” series.

Management Board of CP Kelco / a Division of Huber:  Mr. Beringause is a member of the Management Board of CP Kelco, a consumer products division of Huber, which processes .nature-based’ ingredients for the food industry.

 

From FoodDive – a perspective on the circumstances which led to this change:

Dean Foods Replaces CEO with Eric Beringause amid Continued Struggles; by Lilliana Byington for Food Dive.  Insights from this article’s author describe the company’s struggles, the challenges ahead, and Beringause’s record.

In recent years, opinions about Dean Foods and its future have been offered by every level of the dairy supply chain from dairy farmers to financial outlets to board rooms across the nation.  A change has occurred.  The entire dairy economy will benefit from a healthy and vibrant Dean Foods. We are hoping that Mr. Beringause is indeed, the leader with the skills to build a positive future – many dairy communities will be counting on it.

 

29_July_Dean_Foods_Beringause_CEO

Dean Foods: Earnings. Farms. Jobs. Communities. What’s Ahead?

7_Dean_Foods_Milksheds_Header_Q1_19_2_S
The Dean Foods Earnings Call, a webcast relaying financial news of Dean Foods, a publicly traded company, was held on the morning of Tuesday, May 7th, 2019.
The timeframe immediately before and after these publicly available Earnings Calls, for any company generally provide a wealth of information concerning the financial health and status of that company, along with various industry perspectives.
According to company information, Dean Foods is the “nation’s [US] largest processor and direct-to-store distributor of fluid milk.”  As such, any decisions made by the company will have a direct impact on local/regional dairy communities across the country, affecting many dairy farms and jobs within and related to the processing plants.
It can be said that Dean Foods is perhaps the company which is most supportive of the local and regional farm communities within a fairly close radius of each of its 58 plants.  Additionally, there are 19,000 local jobs in processing and distribution and related company functions at the plants.
Here are general takeaways from the Earnings Call – a grassroots perspective:
  • First: No really horrible news for farms or local business, or even Dean’s resulted from the Q1 call, which I consider a positive, given the company’s downward trending stock prices of late.
  • Second: Stock value was generally up for the day, with market share price at $1.75 at the time of close of business on May 7th.
  • Third: No immediate transitions or sales of the company were announced (as of that day), even though it is no secret the company is exploring options.  Whatever the company’s eventual decisions, there is no doubt that local communities and farm economies across the country will be impacted – but no one knows if that will be in a harmful or helpful manner at this writing. 
  • Fourth: The world of food in general – and dairy companies in particular – is fast-changing, so any news today may be very different a week from now.
Stockholders Meeting: The Dean Foods Stockholder Meeting occurred Wed, May 9th at 9 am, CDT.  The meeting is archived here if readers would like to listen in. There is a delay at the front of the meeting in the recording.
 
Prior to and following the May 7th Earnings Call: These Posts  (chronological)
  • May 6, 2019: Dean Has Got Milk but Few Growth Prospects as it Hunts for Buyer, by Lydia Mulvany and Katherine Doherty for Bloomberg
  • May 6, 2019: Dean Foods Falters from More Concentrated Milk Market – authored by Heather Haddon, for the Wall Street Journal:    (and in case you can’t get to the online edition, here’s a photo of the article as it appeared in print)
  •       5_WSJ_Dean_Foods_S
  • May 7, 6:58 am, by Seeking Alpha: Dean Foods Misses Q1 Estimates – notes that sales declined in 9% in Q1 2019, and to this blogger’s understanding, the comparison point is Q1 in 2018 (will verify). Remember, in 2018, the company still had branded shelf space in Walmarts in several states in the projected distribution radius of the new Walmart plant at Fort Wayne, Indiana.
  • May 7, 10:23 am (after the call): Dean Says It’s Turning the Corner with Dairy Drain Set to End – by Lydia Mulvany and Katherine Doherty for Bloomberg – authors note the report was a ‘mixed bag,’ stated the company’s bonds gained on Tuesday (the day of the call) after ‘tumbling since late February.’
  • Dean Foods Company SEC Filing – Current report (8-K) May 7, 2018 (Financial Statement)
  • A Transcript of the Entire Call – posted by Seeking Alpha – access at this link  (21 pages if you print, follow a link to an audio recording): includes the opening statement by Dean Foods officials, including CEO Ralph Scozzafava, and a Q&A Session with Financial Analysts  from well-known companies
  • Slides – played in conjunction with the Dean Foods officials portions of the call, includes graphs and charts further explaining the verbal points – access at this link

And then following the call:

May 7th, Afternoon:  From the Dallas News:  “Dean Foods posts Wider Losses Than Expected in first quarter amid Conversations with Potential Buyers.”

An article by Dom Difurio, a breaking news business writer for the Dallas Morning News, included these three statements of note:
  • “On a call with analysts frustrated with a lack of details around when the company could turn a financial corner, Dean Foods also reiterated that it’s looking at strategic alternatives to accelerate its business transformation and enhance its value.”
  • “When asked whether the company was in talks with any potential buyers for the company, Scozzafava said it’s possible the company could do nothing.
  • “We’ve been in conversations with some folks, and we’ll leave it at that . . . we are very open minded and exploring some things,”  Scozzafava said.

May 7th, Afternoon:  Dean Foods (DF) Reports Q1 Loss, Misses Revenue Estimates  from Zacks Equity Research, a financial publication.

“Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Food-Dairy Products is currently in the bottom 8% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.”
May 7, 2019 at 3:55 pm:   Dean Foods Needs an Activist Investor  
Posted at Seeking Alpha, authored by Holmes Osborne, of Osborne Global Investments
This is a blunt, tell-it-like-it-is perspective from a financial analyst’s viewpoint, who describes the company’s real estate and transportation assets as interesting. He also suggests some action items for the company to take in order to cause company value to rise.
With most of this blog’s readers in agriculture, it should be noted he suggests the company needs to widen its portfolio to include more plant-based or alternative beverages, or expand whey-protein production.
Parts of this article are a bit hard to read, but may be necessary to absorb in order to take action.
Also – take note, some of the $$$ referring to milk sales are not as impactful as he suggests due to market conditions of two different time frames, and some of his other statements related to agriculture show a bit of a lack of knowledge about grass-roots agriculture.
The Good News?  Osborne also suggests it may be time to buy stock, acknowledging it is risky at the moment.  The opening click title was  “Bottom-Fishing Investors, Snag Dean Foods.
May 8th, 2019, Morning:  “Dean Foods Sees Positives After a Quarterly Loss,” by Jeff Gelski for Food Business News.
  • CEO Ralph Scozzafava notes that a cost productivity plan and improvements in free cash flow provide optimistic things about the quarter
  • Scozzafava: “We believe we have passed the inflection point in our transformation, as many of the initiatives we implemented over the past 12 months are now beginning to take hold.”
  • Scozzafava (when asked about a potential sale):  “It’s very possible that we won’t do anything, and we’ll continue to execute the plant that we have, which we’re very happy with, and we’ll continue to make progress on it. “So look, we’ve been in conversations with some folks, and we’ll leave it at that.”
May 8th, 2019, 1:42 pm: “Dean Foods Seen Trading at Fair Value,” posted at Seeking Alpha and authored by Clark Schultz.
  • Notes this from Wells-Fargo Analyst John Baumgartner:  “The outlook features some positives (seq. EBIT improvement, positive FCF, new business wins), but we think weak volumes, expansive price gaps, and inflationary price basis to dairy costs maintain DF in a vulnerable position.”
  • “Wells-Fargo has a Market Perform rating and a target price of $2 on Dean Foods.”
May 9th: Stock closed at $1.65/share
May 10th, 2019, Afternoon:   “Why Dean Foods (DF) Stock Price Advanced Up to 5.76% Today”  by Samuel Moore for Find News
  • Moore observes that stock has an (average analyst) potential target price of $3.47 share, thus a potential to rise 98.29% increase from recent ranges of $1.57 to $1.71.
  • Trading volume was considered high
Dean Foods stock closed at $1.76 for the week of the Earnings Call, up 11 cents from a close at $1.65 on Friday May 3rd.
May 13th, 2019 (Monday):  Dean Foods Shares Up 11.4%”by Harvey Truce for Rockland Register.  Surprisingly,  Dean Foods stock rose 20 cents/share in light trading volume.   A midday report was posted by Ethane Eddington for the Press Recorder, “Dean Foods (DF) Add 4.5%, Cementing Place as Top Mover Today.”
May 13th, Market Close: Stock closed at $1.96/share, and traded as high as $1.98 during the day.
June 3rd, 2019:  (Monday) Now is the Time to Bet on Dean Foods Company’s Stock: by William Josephs for Finch News, an online publication.
June 3rd, 2019:  Stock closed at $1.06.
June 5th, 2019  (Wed am):  Dean Foods Company (DF) Among Top Stocks to Watch Today:  by Denise Gardner, for Press Recorder
June 5th, 2019 (Wed, 1:34 pm): Dean Foods +13% after skirting with dropping below $1;    posted on Seeking Alpha by Clark Shultz
June 5th, 2019 (Wed):  Should Traders Take A Bit Out of Dean Foods Company?; by Kiel Taylor for US Post News
June 5th, 2019:  Stock closed at $1.22/share
June 6th, 2019: Stock closed at $1.22/share
June 7th, 2019, 8:44 am:  “Saputo takes a pass at Dean Foods”: Seeking Alpha news alert breaks news Saputo will not be acquiring Dean Foods, after earlier announcements Saputo was considering that acquisition.
June 7th, 2019, Midday: “Let’s Make some Money with: Dean Foods (DF) Company” – posted at Nasdaq News Updates, compiled by the NNU Team.  This article explains many of the terms and acronyms commonly used in financial reports about stock prices.
June 26th, 2019: America’s Biggest Milk Processor is Trading at Less than a Buck, by Lydia Mulvany and Katherine Doherty for Bloomberg.
June 26, 2019:  Dean Foods Stock closed at 95 cents / share  (Volume 2,552,000)
June 27, 2019:  Dean Foods Stock closed at 93 cents / share  (Volume 2,974,000)
June 28, 2019:  Dean Foods Stock closed at 92 cents / share  (Volume 4,959,000)
July 1, 2019: Dean Foods Stock closed at 93 cents / share (Volume 2,537,000)
July 2, 2019: Dean Foods Stock closed at 97 cents / share (Volume 2,264,000)
July 3, 2019: Dean Foods Stock closed at $1.07 / share (Volume 2,397,0000)
July 5, 2019: Dean Foods Stock closed at $1.10 / share (Volume 2,338,0000)
July 6th, 2019: Dean Foods Cut to “Sell” at ValuEngine, posted by Steve Reilly on Riverton Roll.
As those in the dairy industry know too well, this is an evolving story with lots of moving parts.  Look for additional updates as they become available.
And please keep in mind, this is mostly a chronicle or digest of information which has been published by other sources. This blog in no way suggests advice on taking actions either in the stock market or in a related business due to information published here.
7_Dean_Foods_Milksheds_Header_Q1_19_2_S

H Barlow named Executive Director of Kentucky Dairy Development Council

0000_KDDC_H_Barlow_Executive_Director_S

Source: News Release from KDDC, written by Eunice Schlappi

 

H H Barlow  III,  a life-long dairy farmer from Barren County, has been selected to lead the Kentucky Dairy Development Council (KDDC) as the new Executive Director as of May 1. He follows Maury Cox, who retired at the end of February after holding the position for the past 10 years.

H and his wife, Kathy own and operate Barlu Dairy in Cave City and are currently milk 120 Jerseys. They have four adult children – Gini Lin, Brad, JP and Josh.  They also have 14 grandchildren.  They are members of the Immanuel Baptist Church in Glasgow.

Mr. Barlow graduated from the University of Kentucky and has worked for 34 years in feeds sales in addition to his dairy farm.  He is a past board member for the KY Agricultural Development Board; he served on the KY Agricultural Council; he was chosen to serve on the U.S. Board for International Food & Agricultural Development; he was the chair of the founding committee for the KDDC and served on the KDDC board six years; he served on the Lone Star Milk Cooperative board of directors for 11 years; and he  served on the ADA of KY/SUDIA board for 11 years.

When asked why he wanted to become the KDDC Executive Director, H stated that he is very passionate about the dairy industry, always has been.   He plans to work with the four KDDC dairy consultants to help improve the profitability and sustainability of Kentucky’s dairy farm families.   He fully understands the challenges that dairy farmers are facing but is very hopeful for future improved conditions within the industry.  He plans to working closely with Kentucky’s dairy farmers, Governor’s Office of Ag Policy, KY Dept of Agriculture and all allied industry relating to dairy.  He feels that teamwork and networking will be a key part of the job as he moves forward in this new position and is looking forward to working with all of Kentucky’s dairy industry.

Congratulations H H Barlow, III!

 

0000_KDDC_H_Barlow_Executive_Director_S

Maury Cox: Dairy Advocate. Milk Leader. Friend.

387_Maury_Milksheds_Friend_S
“It’s the people that make the difference, and there’s no better people than dairy farmers and their families.” 
This is how Maury Cox summarizes his perception of the people he’s served – mostly in Kentucky, but extended to the Eastern United States – during his tenure as Executive Director of the Kentucky Dairy Development Council, a position he’s held since May 31, 2009.
Cox was honored by his peers and colleagues for his service to the Dairy during the Awards Banquet of the Kentucky Dairy Partners Annual Meeting in Bowling Green, KY on February 26, 2019.
Cox had announced a retirement date of March 1st, but since the position has not been filled as of press time, he will be available for additional duties until the time a new Executive Director is named.
795_Maury_Recognition_Gift_Sq_S    729_Maury_Fishing_Pole_S
Maury Cox was honored at the KY Dairy Partners to recognize his service as Executive Director of the Kentucky Dairy Development Council. He was presented with a signatory crock, and was delighted to receive a new fishing pole, presented by Tom Hastings.  In case you didn’t know, Maury is almost as passionate about fishing as he is dairy cows and dairy people!
His leadership at KDDC culminates a life-long career in the dairy industry.  He began as a dairy farmer, and later worked for Kentucky Artificial Breeders Association / Select Sires.  He was a founding member of KDDC in 2005, and became the Dairy Consultant Director in 2007.
730_Maury_KDDC_Consultants_Milksheds_S.jpg
As Executive Director, Cox worked closely with and relied on the efforts of his current team of Area Dairy Consultants, who serve four regions across the state.  From left to right (above), they are Meredith Scales, Jennifer Hickerson, Maury Cox, Beth Jones Cox, and Dave Roberts.
On any one day, Maury could be speaking to a committee at the KY Legislature in the morning, visiting a farm in in the afternoon with his barn boots on, and ending the day by promoting milk at a ballpark.
Without a doubt, Maury led his state during the most challenging time of all in 2018 as 19 dairy producers lost their milk contracts and markets.  With grace, poise, and an almost 24-hour effort, Maury led the way to 11 producers eventually finding a home for their milk with either Scioto Milk Producers Cooperative of Ohio, and some with DFA.  As an eiplogue, some of those 11 survivors have since gone out of business as well.
Maury has collaborated with many affiliated organizations to advance the dairy industry in Kentucky, in the Southeast, and across the country. For a number of years, he, working with others, such as the Kentucky Department of Agriculture, organized bus tours and educational trips on a regular basis.
Maury has always appreciated the role an ‘outside perspective’ and exposure to new ideas can play in enhancing a dairy farm when new ideas are applied. The Kentucky Department of Agriculture has been one of his most valuable working partners through the years on these outside trips.  Additionally, he is considered a “Senior Statesman” of the southeast dairy industry.
He has made a point to build bridges with other state producer groups, respecting that there are differences from region to region which affect farmers in every area across the country.  When he learned something that made a difference to Kentucky, he tried every way he could to make that a reality in his home state.
A prime example is the implementation of the Market Industry Leader of Kentucky (MILK) program. With KDDC organizing a collaborative effort of co-ops and processors, the effort was designed to make strong improvements in Kentucky milk quality in order to remain competitive in today’s milk marketplace.
Over the years, this program has supported milk quality improvements, putting $8 Million dollars back into the Kentucky farm economy.  A longer term result is that the collective Kentucky dairy industry is generally more sustainable.
Communications of the KDDC also went to the ‘next level’ under Maury’s leadership.  The Kentucky Milk Matters newsletter is read across the southeast, and is considered an accurate source of current information.
As a regional policy leader, Maury played an instrumental role in the Southeast Dairy Coalition, an informal working group of grass-roots dairymen from several states who worked together to navigate the challenges of the 2009-11 Dairy Crisis, as well as influence the 2012 Farm Bill.
Sometimes as a leader, and sometimes in collaboration with others, he has been a part of many meetings concerning milk pricing and Federal Milk Market Order function, and has worked to effect change in that sector as much as possible.  Getting timely information to his producers has always been a priority.
As parting words, Maury offers this perspective on the future:
“As long as supply outpaces demand, over-order premiums in most markets will be non-existent. Premiums are where the profit is.  Until dairy farmers come together and decide they want something different, fewer and fewer will continue in business.”
Maury’s plans includes more time to recreate and travel with his wife, Sue, and their family, to devote more care to his mother, and of course, spending more time at any favorite fishing spot or watching a Kentucky Ballgame (basketball might be his favorite!)  It’s safe to say he’s as passionate about those things as dairy!
Maury is also a man of deep faith, and applies faith and prayer to every situation. He shows Christian grace in his everyday and his professional life, and his approach to some very difficult situations is a testament to faith in action.
875_Maury_Bob_S  876_Maury_Warren_Beeler_KDDC_Wide_Sq  880_Maury_Eunice_iphone_Milksheds_W_H2
Maury reminisces with some folks he’s worked with through the years: Bob Klingenfus, a former President of KDDC, Warren Beeler, Executive Director of Governor’s Office of Agriculture Policy, KY Dept.of Agriculture, and Eunice Schlappi, Office of Ag Marketing, KY Dept. of Agriculture.
Robert Klingenfus, a former President of KDDC, says:   “The Kentucky Dairy Community has benefited greatly from Maury’s leadership.  His dedication to serve producers was unparalleled, and he has navigated challenging events with a calm, steady hand.  We can never thank him enough for his efforts.”
Bob continues:  “Maury has been a help to countless dairy farmers. On the surface we see Maury helping with Milk quality problems, division of water issues. But what he is really good at is what he calls facilitating.  He is a good listener and when you are done venting,  he will give a few suggestions and  the names of people that can help you with your problem.  He is careful not to tell you what to do, but facilitates  you with the ability to achieve what you are seeking.  Maury has become the go-to man if you need something; he seems to know everyone. If you need a barn, Maury knows who has built one recently, or sell or buy cows same thing, he put people together to solve problems.
“It has been an honor and privilege to serve you. I am a lucky and blessed guy,” were Maury’s closing words on the evening of the KY Dairy Partners banquet.

Here’s to you, Maury!  Those sentiments are a thousand times reciprocated!  We know we’ll be seeing you around!

387_Maury_Milksheds_Friend_S

We have been blessed you chose to serve us.

Dean Foods Earnings Call FY 2018: Background. Context. Future?

00000_Dean_Fods_Earnings_2_Heading
In an entire food sector which is facing challenges at the moment from several different fronts, Dean Foods held their FY 2018 Year-end and 4th Quarter Earnings Call on Wednesday morning, February 27, 2019.  Dean Foods sources milk from independent contract farms and co-op members all across the nation, the Southeast included.
A summary of the context surrounding the event:
  • Most of food sector is off in recent financial reports
  • Sales of Dean Foods dairy products are still good  – Sales of $1.93 Billion for the Quarter actually beat a $1.91 Billion Estimate
  • Future: unknown; don’t give up hope – engage in a productive discussion
  • Initial Stock Prices and reaction after call: Dean Foods stock has traded in the $4 to $4.50 range for a couple of months (early 2019).  It was near $4.50 early Tuesday, Nov. 26 (the day before the earnings call), then dived under $3.90 for a bit of time on Wed. Nov. 27 (day of the call) and closed at $3.92.  On Thursday, Feb. 28, 2019, (day after earnings call), the stock closed at back over $4 at $4.01.   These highs and lows are par for the course after an earnings report.
 
The news from that call, and additional reports, is no real surprise to anyone who has been following Dean Foods for the past couple of years, but it has once again laid out the factors which will continue to affect the farm sector in the near future.  There is not a farm, nor a food company, anywhere, who is not affected by a changing food environment. Many big food companies, KraftHeinz included, are not having good earnings results of late, and there has been a ripple effect on Wall Street though all food business.  More closely related to dairy economics,  ‘‘Natural Cheese” was cited as one of the categories which led to Kraft’s difficult report. 
 
In many ways, we can feel a bit fortunate. Why?  Because Dean Foods is a publicly traded company, it is required by the SEC to issue reports and filings available to the general public and shareholders. Therefore, we do have a bit more knowledge about the true state of affairs.  We know (at least mostly) what we’re dealing with. 
 
Before providing the links to various reports (and not all of them are doom and gloom), I would offer this advice:  just take these reports as just that – reports. Dean Foods and its products still enjoy a lot of sales, a lot of income, and a lot of shelf space – it is the nation’s third largest dairy company.  That is a positive, and let’s be grateful for every hour we have that.
 
Remember the situation that led to this week’s report:
 
Also keep in mind that so much of this began over three years ago when Walmart announced they would be building their own milk plant.  Since then, the entire industry has been questioning how they would reckon with the Walmart monstrosity and their brutal tactics in the distribution and product acquisition sectors.  
Our area (Ky and TN, for the purposes of this post) felt that most intensely last spring when a living hell was catalyzed by the (at that time) expected June 2018 opening of the Walmart plant in Fort Wayne, Indiana, and over 100 farms in 8 states lost their Dean contracts.
Dean was not the only one affected or involved nationwide, but Dean, because they are publicly traded, took the great brunt of the fall and bad publicity. Dean was not the only party involved in farms losing contracts, and it could be even said, they were a victim as well of the Walmart entry into milk processing.
Since the Walmart plant opened in the summer of 2018, it is no secret they have experienced difficulty after difficulty, and still yet do not have all the bugs worked out of operations – neither at the plant, or distribution to stores from that plant.  
 
It is most sickening to think that some farms went forever-out-of-business because of fear of that new Walmart plant, which has had issue after issue, is not yet dependable, and  it is not known if it will ever be.
These million and billion dollar bad decisions by a big-box company have forever affected small communities in the east and southeast United States.  The fear and rumors related to Walmart and an assumed expansion after the first plant came on line have also been factors in the current industry state-of-affairs, although those rumors have quietened down as of late. 
 
Additional contributing factors affecting this Dean Foods earnings report: 
Sales of Milk: Generally, fluid sales of real milk (cow’s milk) are down, with the exceptions being whole milk and specialty dairy milks and dairy beverages. Let’s look at that as lessons and opportunities, and not despair, but get to work!   It is time we as farmers quit depending on hired employees as the only people who should ‘sell’ our products – we should also be full time milk salesmen ourselves!
 
Misinformation on the internet and in other places:  Don’t ever deny the impact that misinformation about milk and its health benefits, as well as our farming practices, has had on milk consumption, and milk consumption is the real reason for a dairy farm’s existence.  We, individually as farmer and industry agvocates, have got to step up our game, or the misinformation will win. Even popular sports figures are now being touted as ‘dairy free.’   (check the Dodgers!) 
 
Enormous expenses ran more than estimated related to Dean Foods plant closures – but that is largely past:  Only time will tell if it was a long-term wise move for Dean Foods main executives to decide to close 7 milk plants around the country.  However, in the short term, those costs were reflected in the two most recent quarters of financial reporting, and should be minimized going forward. 
 
0000_Dean_Foods_Timeline_Section
So, now back to the current Dean Foods situation, here are some links to current information, generally believed to be credible, and mostly in chronological order.  If you will pay attention to the events of Feb 27 and the timing, you can see how quickly information (of all kinds) is dispensed, so please keep in mind this is a fast-moving story, similar to that which other companies experience on the day of Earnings Reports. Any news should be considered “current” at that moment it is reported, events can change quickly, and perspectives are those of individual articles:
Mid-February, 2019:  The Milkweed reported about a “Notice of Covenant Waiver”   filed by Dean Foods, which could have had implications if not corrected by March 1st, however, it appears that situation got resolved in recent days, at least for the time being. (anecdotal, still trying to verify). 

Feb. 14, 2019: Dean Foods’ Great Brands Are on Track for a Profitable 2019

  source: by Faloh Investment – touts Dean’s recognizable brands as a positive
Feb. 26, 2019: Dean Foods Explores Strategic Alternatives to Accelerate Business Transformation;  source – Seeking Alpha, notes company is evaluating different strategies which may (but not certain) include sale of certain assets, joint ventures, more;  Stock jumped 10% with this news on the Tuesday evening before the full earnings call on Wednesday morning.  Other similar reports available with google searches, mostly different takes from the original news release.
Feb. 26, 2019: Local report about potential sale from Maria Halkas, Dallas News.com – largely uses information from the company news release above

Feb. 27, 2019 – 6:45 am:  News Release of Fourth Quarter and FY 18 Results

 

Feb. 27, 2019 – 6:57 am:  Dean Foods posts unexpected Q4 loss, suspends guidance(in layman’s terms, guidance is financial projections)
Feb. 27, 2019 – 8:10 am: Official Filing of 8-K with the SEC
This is a document required by law to be filed with the SEC.  There are some actions noted in the first few pages which may be of interest.
Feb. 27 – 9:00 am:  The Earnings Call / Webcast took place,  and a transcript was posted by 2:54 pm.  Listen for yourself to the audio of the call, or read the transcript, which are both available. The audio will take 50 minutes. .
Feb. 27 – 10:29 am: report on Benzinga titled:  Morgan Stanley: Pressures on Dean Foods Could Weigh on Company through 2019:   Report notes that $ales for QY 2019 actually beat the estimates:  Sales of $1.93 Billion beat a $1.91 Billion estimate
Feb. 27 – 12:47 pm: JPMorgan sees Dean Foods Sale as Unlikely    Ken Goldman, a seasoned financial analyst who is a frequent participant on the Dean Foods Earnin gs Calls, doesn’t think a sale is imminent for the reasons summarized at the link.
Feb. 27 – 2:02 pm:  Land-O-Lakes, a member-owned cooperative with a significant market presence in dairy products, animal nutrition, and an agronomy and crop-input division, released its 2018 Financial Statements.  Land-O-Lakes showed increased net sales, yet lowered net earnings, in 2018 when compared to 2017 numbers.  (See the first paragraphs).
  • Relationship between Dean and Land-O-Lakes:  Dean Foods (publicly traded) and Land-O-Lakes (a co-op) are separate companies, and neither owns the other, but there is a business relationship.  Land-O-Lakes sold its Fluid Milk division to Dean Foods in 2000. The Land-O-Lakes brand, presumingly through an ongoing license agreement, appears on milk cartons in the upper midwest.  And with Land-O-Lakes owning Purina and Winfield Crops, Land-O-Lakes still serves farms across the country shipping milk to Dean Foods plants.
Feb. 27 – 3:19 pm:  Slides posted from Dean Foods Earnings call:  These will provide a quick look-summary of the information discussed in the Earnings call, but should be viewed with caution without the context of the call.
Feb. 27th – 4:15 pm:  “Dean Foods: How Bad Is it?” – perspective from Value Analyst – notes company’s debt of $887 Million, compares significant financial numbers in relation to other food companies, more.
Feb. 27th – 6:22 pm:  “Here’s How Dairy Giant Dean Foods Curdled Its Own Milk” :  Karen Robinson Jacobs,  writing for Forbes, believes  that Dean’s current troubles began when Dean Foods sold the Whitewave Division, which included plant-based beverages and Horizon Organics. Consider this a review of past activity, and one writer’s opinion, but it adds to the mix of “how did Dean find itself here?”

Follow-Up Reports:

Feb. 28th – early morning: Market Watch notes some positives and challenges, yet questions, in addition to JP Morgan, if the company can find a buyer
Feb. 28th – early morning: Food Navigator, particularly, notes the quarterly and yearly losses were not due to a significant loss in sales, but due to enormously increased expenses.
March 1st – late morning:  James Brumley, Feature Writer for InvestorPlace, notes that the ability of food retailers such as Kroger, Walmart, and others to process their own private labels, enhanced by the ability to use milk as a loss-leader, has contributed to Dean Foods current stock price challenges.  His perspective is titled: “Dean Foods Stock has passed its Expiration Date.”
March 4th  – afternoon: from Seeking Alpha: summary of a perspective from Wells Fargo’s John Baumgartner  titled: Well-Fargo dissects M&A potential at Dean Foods. Perspective notes ‘DF sells $550MM+ of excess cream annually.’  (cream = dairy fat, rising in market demand) may be attractive to some potential buyers.  On this afternoon, 4 business days after earnings call, stock closed at $3.56.  On Thursday, Feb. 28 (1 day after call, stock was in the $4.00 range)
March 7th (Thursday):  Stock Price closed at $2.88/share, and came back to $2.91 after hours
March 9th – (morning):  Dean Foods Bonds Drop 2.2% During Trading:  reported by Lisa Matthews of Fairfield Current, a digital newspaper focusing on tech, health, science, and global events:  Article contains information on recent stock trades, and notes that on Friday, March 8th, stock traded down 17 cents / share, with a trade volume 2.5x that on a normal day: (4.34 million shares vs. avg. of 1.876 million shares per day.)  A lot of the trading volume in recent days and months has been due to institutional investors and hedge funds.
March 11th:   Two Stocks to Tuck Away: The Mosaic Company (MOS) and Dean Foods (DF): the lower half of this article notes recent volume trades of note of Dean Foods stock. Article contains lots of financial market lingo.  Article by Andrew Francis of Financial Mercury.
March 11th: Historical Performances Are Key to Consider:: Dean Foods Company (NYSE: DF) – an explanation of financial terms such as EPS, and looks back at some events coming up to the current weeks and days.  From Top Stock News.
March 12th: Analysts Anticipate Dean Foods (DF) Will Post Earnings of 15 cents/share (by Lisa Matthews for Fairfield Current):  Explanations of recent trades, even some purchased by some retirement funds.
March 12th:  Implied Volatility Surging for Dean Foods Stock Options (from Zacks) – an explanation of investors taking positions in anticipation of future stock price moves.
March 14th:  Bernstein drops Dean Foods (from Dairy Reporter) – suggests (suggests!) sale may come by division, but interesting that company itself is downsizing and in the process of restructuring.  Alexia Howard, a Bernstein representative who is a regular on the Dean Foods earnings calls, was noticeably absent from the Feb. 27th, 2019 call.
March 14th: Sentiment Still Supports the Bullish Case: Dean Foods (DF) Company:  Article by Kevin Freeman for the MonReport explains some financial terms and how they work, such as Relative Strength Index (RSI).  In this case, at the time of this post on the morning of Mar. 14th, with an RSI of 22.13, Dean Foods stock is considered to be oversold.
March 29th: Bear of the Day: Dean Foods:  Article by Benjamin Rains for Zack’s.  Notes that Dean, along with DFA and other ‘real dairy’-focused entities, are facing challenges and possible crossroads “due to the rise of alternative ‘milk’ offerings such as oat, nut, and soy, along with other non-dairy options for ice cream and more.”   Perspective goes on to note that that the “global dairy alternatives market is projected to soar  from $11.9 billion in 2017 to $34 Billion in 2024.” 
April 11th: Dean Foods Company (DF)’s Mixed Signals Lead to Crossed Wires: Article by Abby Carey for The Mon Report
April 12th: Dean Foods Attracts Takeover Interest from SaputoGlobe and Mail: reported by Seeking Alpha, with a link to a Globe and Mail story
April 15th: Saputo eyes US Dairy M&A – summary from Seeking Alpha; notes Dean shares were up 5.61% early in the morning on Monday, Apr. 15th after possibilities first announced late on Friday afternoon, April 12th.
April 15th: Saputo interested in Acquiring Dean Foods, report says:  a summary published at Food Dive.  Notes Saputo, a Canadian-owned company, owns 62 plants in 40 countries around the world, and reported an 18.4% increase in revenues at it’s last earnings report.
April 15th: Saputo to be disciplined with M&A:reported at Seeking Alpha.  Quotes Lino Saputo, “The level of discipline will be even more enhanced.” Notes Dean Foods closed up 7.48% (price $2.30/share) for the day.
April 18th: Can it sustain the pressure built by the Analysts: Dean Foods Company (DF) – article by Christopher Black for West News Now.
April 18th: Implied Volatility Surging for Dean Foods (DF) Stock Options – credited to Zack’s Equity Research, published on Zacks.com:  Article explains that “implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or another.”  Notes that a “Jun 21 $3.00 Call had some of the highest implied volatility of all equity options today,” [April 18th].
April 29, 2019: (posted mid-morning): Dean Foods Company Stock is 2.39% Higher Today, What Just Happened? – by Melanie Gerald, for FindANews.com;  article details the volumes of current and historical trades, and what they could potentially mean
April 29, 2019: (posted morning)  If You Had Bought Dean Foods (NYSE: DF) Stock Three Years Ago, You Would be Sitting on An 89% Loss, Today – From Simply Wall Street.
Timelines and charts have ‘minute captures’ of events: Access those here.
Stock closed at $1.81/share.
This Ed Bosworth article for Find A News notes to look beyond share price and consider fundamentals and future growth potential.
April 30, 2019: Analysts Estimate Dean Foods (DF) to Report a Decline in Earnings: Here’s What to Look For – (post at Zack’s Equity Research).  States there’s a Year-End Earnings report expected on May 7th, and expectations are it may be worse than expected.
At the end of the day, April 30, the stock price had dropped to $1.70/share.
May 1, 2019: How Far Dean Foods Company Will Fall Today:  (post at Find A News, authored by Peggy Goldman)
May 1, 2019:  One Stock with Low Beta Value: Dean Foods;  by Aston Bradley for Investor Place
Stock Closed at $1.61/share on this day.
May 2, 2019:  Rounding UP the figures: Dean Foods Company (DF), McDonald’s Corporation – written by Sarah Watson for FIN Bulletin.     From the article: “One metric that indicates how volatile a stock’s price is compared to the wider market is the Beta. The Beta value for Dean Foods Company (NYSE: DF) is 0.24 indicating less volatile than the rest of the market.”   Yet no predictions on what the company is going to do going forward.

 

May 2, 2019:  “Dean Foods Company (DF) Stock May Not Offer Adequate Shelter”, written by Rob Hiassen, and posted at FinBulletin. com

Directly from the article:  Institutional investors currently hold around $140 million or 92.2% in DF stock. Look at its top three institutional owners: Blackrock Inc. owns $24.27 million in Dean Foods Company, which represents roughly 18.24% of the company’s market cap and approximately 17.34% of the institutional ownership. Similar statistics are true for the second largest owner, Vanguard Group Inc, which owns 9,845,854 shares of the stock are valued at $16.74 million. The third largest holder is Dimensional Fund Advisors Lp, which currently holds $12.95 million north of this stock and that ownership represents nearly 9.74% of its market capitalization.
On May 2, 2019, Dean Foods Stock closed at  $1.54 / share.
COMPARE all of the above to this:  ABOUT A YEAR AGO:  On April 19, 2018 – the stock was $8.95, and this article was written, April 17th:  Is Dean Foods Company (NYSE: DF) Cheap for a Reason?  from Simply Wall Street
May 3, 2019: “Norges Bank Invests $6.97 Million in Dean Foods Company” – this Finance Daily post, authored by Andrew Sebastian, examines several of the volume trades which have occurred in recent weeks.  Various companies still have several differing ratings on the Dean Foods stock.
Stock closed at $1.52 on May 3rd.
May 5, 2019:  “Dean Foods Falters in More Concentrated Milk Market” – Heather Haddon, who covers food and retail policy for the Wall Street Journal, analyzes several recent trends which have affected the dairy business in general, and Dean Foods in particular across the country.

Where Do We Go from Here?

That, literally, is a Billion $$$ question, with the implications that our farms, processing jobs, related agribusiness, and extended rural communities are all at stake.
We in the Southeast, as well as other regions of the country, have seen many other episodes of dilemmas that occurred when decisions that affected our communities were made far, far away in corporate boardrooms by people that didn’t know ‘us.’
We are grateful we still enjoy cordial community relationships with our processing plants, and the folks who are employed there. Those folks have a great deal to lose as well as our farming communities – there are jobs which could be affected, and a resulting effect on the municipal economies in those regions.
At this point, I have no answers, but only questions to provoke thought:
  • How can we help the Dean Foods situation and the Dean Foods brand in our own communities?
  • What, generally, do you see as an answer to Dean Foods future?
  • If a sale occurs, do you have any idea who are the buyers you would be OK with, and buyers you would definitely not want to control our futures?
  • What are you yourself willing to do to promote the sale of milk (and specific milk brands which we can trace to our farms) to keep sales alive, and perhaps even recapture from plant-based beverages?  (Note: I am not suggesting criticizing checkoff efforts with this question.)
  • What are you willing to do yourself –  or invest in time wise or monetarily wise – to protect your future?
The truth is, there are many answers to the question about Dean Foods future, and it will take several efforts to chart a course for a brighter future.
One thing is for sure – we can’t take anything for granted!  We ourselves – as individuals and as farms – are going to have to become more active in convincing consumers that real milk is a great product! 
There will be more to come as this story evolves and as we pursue our farming futures.
(Note: some updates have been added after initial posting on March 1, 2019)

To Be “Milk” or Not to Be? That is the Question!

17_Labeling_FDA_Public_Comments_BW_S

UPDATE: Comment Period Extended Until October 11!

August 27th is Deadline for Comments to FDA on Milk Standards of Identity

Background Information for the purpose of preparing public comments to the FDA concerning Standards of Identity for Milk

 

On March 29, 2018, FDA introduced the  “FDA Nutrition Innovation Strategy,” a comprehensive effort to review labeling of foods and an impact on human health, particularly in relation to preventable and chronic diseases.

“An almond doesn’t lactate, I will confess.”  And with those words, FDA Commissioner Scott Gottlieb, in a July 17 report by Politico,  amped up the debate about the relabeling of plant beverages which label themselves as ‘milk,’ which many believe are misleading and deceptive.

Although firm enforcement of FDA standards of identity should have been implemented several decades ago when “Plant Beverages” or “Nut Milks” first began to creep onto ‘dairy’ shelves, they were not.  No one knows the reasons why, but here we are, now with a debate and labeling examination which will cost taxpayers – and companies – millions of dollars.  Here’s some background:

A History:

First, it’s helpful to actually read and know about the standards as they exist:

000000_FDA_Standards_Identity_S

Standards of Identity for ‘Real Milk” were established in 1938 in the Federal, Food, Drug, and Cosmetic Act.

Part of the controversy results from the “real” vs. “processed” (aka ‘fake/faux ) nutritional properties of real milk.  The Wisconsin Agriculturist, in a July 23rd, 2018 article written by Fran O’Leary,  describes it this way:

Real milk provides eight times more naturally occurring protein in every glass, is wholesome and simple, and is a minimally processed beverage. Real milk also has no added sugar. The sugar in real milk is lactose, which is a naturally occurring sugar. Many types of nondairy milk, such as almond milk, contain sugar. Tell that to your friends and family members who believe otherwise.”

The Wisconsin Agriculturist concludes that article by quoting an emphatic statement from the American Dairy Coalition, which reminds real dairy advocates:

“It is crucial the dairy industry speaks up on the issue,” the American Dairy Coalition said in a statement. “We can no longer stand by” and allow plant-based beverages to be labeled as milk.

On July 26, 2018, the FDA released an official statement concerning its reasoning and approach to re-working milk / dairy labeling standards.

This statement occurred in conjunction with a July 26, 2018 Public Meeting to Discuss FDA’s Nutrition Innovation Strategy.   Several industry stakeholders went on the record with comments at that meeting, and those comments can be accessed via links here. 

Public comments on the FDA Nutrition Innovation Strategy will be taken until August 27, 2018.  (Update / 3rd week of August:  comments now taken until Oct. 11.)  Comments can be posted at this docket folder. (Electronic – OR – written/mail delivery submission is acceptable!).   It is particularly important for dairy FARMERS – those whose livelihood depends most directly on the sales of milk from their farms – to comment either individually, and via any producer organizations of which they are members!!

A Kathleen Doheny Article from WebMd:
“[Gottleib] . . . said the agency has ”probably not” been enforcing the standard of identity — and as a result, this nonenforcement has become the standard.”
– Agency will be ‘modernizing’ the standards of identity
– Comments expected be taken for a year
– Intentions to enforce standard of identity

The article also notes that plant / nut beverage sales increased 61% from 2012-2017, while Real Milk sales decreased 15%.

This proliferation of plant-based beverages has led to sales of those products which are expected to reach over $16 Billion (in US Dollars, but referring to the total world market value)  by the end of 2018.  That competition is in two forms: 1) dollars which have been removed from dairy communities & economies across the United States, and 2) Hundreds of Millions of gallons of real milk from real cows which no longer has a home, and has led to a long cycle of depressed prices which is steadily killing rural economies.

Much of that market displacement – and resultant stress on rural economies –  is believed to be because plant “milk” is a term which cannibalizes and preys on the goodness of natural milk, and the proven knowledge milk is natural protein source, readily absorbed by the human body.  

Spirited Plant-Based Advocacy Organizations and Individuals will challenge Real Dairy / Real Cow-Goat-Sheep-Mammal Advocates:

It should go without saying, but never doubt that those organizations and businesses who continue to build their financial empires while opposing the enforcement of standards of identity of “Real Milk”  will be relentless and tireless in their fight to bend the narrative in their favor.

A collaborative editorial in a Boulder, Colorado, web-based publication, advocates for the blurred lines and gray areas which are the basis for the advocacy of truth-in-labeling for those who believe traditional standards of identity exist for a reason.  Their citations to many will be questionable, and in some cases, outdated in their accuracy, particularly in the Greenhouse Gas Emission discussion.   At least one commenter suggests alternative beverages be called ‘milk substitutes.’

The Good Food Institute, whose website has the tagline “Creating a healthy, humane, and sustainable food supply,’ has already submitted this letter on July 23rd, before the July 26th hearing.

Food Navigator, in an article written by Elaine Watson, relays views of a firm which recently raised $24 Million to commercialize ‘animal-free proteins.”  According to the article, the company ‘takes food grade yeast, and adds DNA sequences . . . which instruct the yeast to produce the proteins found in milk.”

[Note: Admittedly, this technology is morbidly fascinating, but also gives real meaning to the terms “Sci-Fi Food” and “Frankenfood.”  We really, really need to ask ourselves:  just because we can – should we?”] 

 

Dairy Farming: continued decline, will it stabilize, or more consolidation?

It is no secret that the dairy farming industry is in a sea change of transition from smaller (400-head or smaller) herds to large herds of 1000 cows or more. And with that change, rural ag economies, the agribusinesses and services which serve those dairy farms are at risk themselves.

From New York, to Virginia, to Georgia, to Wisconsin, and to other regions, reports of dairy farms exiting from the industry are almost of epidemic proportions.  If these were job losses from a ‘factory in a big building’ closing, the public outcry would be deafening. However, because dairy is so scattered across the landscape and not contained in a single building like an industrial building, the loss of these economies is often a silent erosion that gets little public notice.

One example of some of the abuse that has occurred:

From The Cheese Reporter: Sunflower Butter!  A bid request from the USDA itself

But let’s give credit to #TraderJoes, who actually has an acceptable label on their plant beverages!  Kudos to them, and I’ll be back in their stores because they get it right! This is an example to others that it can be done!

900_Trader_Joes_Beverages_Labels_Right_F

Additional Links to Consider (and look for others to be added before Aug. 27th!):

From Feedstuffs:  Gottleib:  “FDA . . . is invariably likely to get sued”

For now, please begin to do your homework, and draft your comments.   It could be as simple as “Real Milk comes from Cows, Goats, Sheep and other mammals.  Make this simple, and have “MILK” be labeled that way!”

From the American Dairy Coalition – Background & bullet points:

You can save time, and comment via electronic means directly to FDA via the portal.  As you do this, please remember your comments may be able to be viewed by the public.

And here’s a link to the portal to comment by October 11 deadline – Comment here.

  • As of 5:00 pm on Monday, August 20, 496 comments were received.
  • As of 11:59 pm on Sunday, August 26, 2,303 comments had been posted.

Please make sure that by late evening, on Monday, August 27, and now on October 11, your voice will be among them too.

#MilkTruthMatters  #IdentityMatters  #RulesMatter

17_Labeling_FDA_Public_Comments_BW_S